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Property tax exemption likely goal of land trusts statewide

In rural town of Limington, a dozen miles or so southwest of Sebago Lake, the quiet balance of country life has been upset over the past few years by a number of land use and property rights disputes between a local land trust and residents, as well as the desire of a land trust to receive the designation of property tax-exempt.

While land use disputes have caused much discord for the local population, the tax exemption case has garnered statewide attention, as land trusts across Maine watch carefully for a precedent-setting resolution in Superior Court.

The Francis Small Heritage Trust (FSHT) is a private, non-profit, corporate land trust that was founded in 1990, according to Dick Jarrett, a founding member who has served as the organization’s treasurer for over 10 years. The trust owns 1472 acres of land with conservation easements and holds a controlling interest through easements on an additional 308 acres of privately-held land, all in northern York County. The Trust calls its primary land holding The Sawyer Mountain Highlands, which according to their website is “located in the largest un-fragmented block of undeveloped forested areas in York and Cumberland counties.”

Tax records from the Town of Limington show FSHT has 225 acres enrolled in the current use Tree Growth program, which necessitates a harvesting plan and which allows for an 80% reduction in property taxes. The commitment book reflects that FSHT has 883 acres enrolled in the Open Space, which can enjoy even further reductions.

In a meeting in the late summer of 2012 a group of a half-dozen landowners from Limington gathered in their town office to discuss experiences with FSHT related to parcels of their land near Sawyer Mountain. Each had found themselves embroiled in conflicts with the Trust over road access to their land, or current or future planned use of their personal properties.

The story goes back many years,” said Charlie Huntress, who served as selectman in Limington for three years, from 2009-2012. “There’s been a lot of litigation over the years against the town, against landowners. The litigation, unfortunately, was made quite easy from [the land trusts’] end, because up until about 4 or 5 years ago, they had an attorney who did all of the work pro bono. It obviously allowed them to pretty indiscriminately sue people and create litigation. That went on for years and the town was continually in a furor defending itself and spending tax-payers’ money to defend itself.”

Pete and Linda Childs found themselves in litigation with the Trust over land Linda owned and Pete endeavored to develop according to the Town’s land use ordinances.

Jarret said that Pete Childs proposed a subdivision adjacent to the Trusts’ property on Sawyer Mountain. He said the Trust contended that “most egregious” offense by the Town was that the Town’s planning board accepted and approved the plans for a subdivision that he said would have deposited septic waste on the Trusts’ property and which, Jarrett said, soil tests showed would create pollution levels higher than what is allowed by law. Pete Childs reported, however, that “the subdivision was properly engineered by professionals and included a hydro- geological nitrate study.”

“The Trust appealed those decisions and before the subdivision [case] went to court, we were able to reach an agreement with [Childs] and the other parties involved for a mutually agreeable solution,” Jarrett said.

Pete Childs’ explanation of the resolution has a different tenor: “For many years, officers of the Trust and other surrogates have been harassing and litigating property owners around Sawyers Mountain,” he wrote in a piece that appeared in the local paper in July 2009. “Settlements were reached without going to court and still the defendants’ legal costs, including the Town of Limington exceeded $100,000.”

“In my judgment, [FSHT] knew they did not have a legitimate case and began to push for more mediation,” Pete Childs reported on the proposed subdivision conflict. “We declined, but agreed to have a settlement discussion in our home without lawyers. In that meeting we concluded an agreement to sell the Trust the 15 acre lot for $45,000, the appraised value was $79,000. Why did we do this? Dick [Jarrett] had suggested that if they lost the case, they would appeal and tie us up for years. We made a business decision. The Trust has promoted this as a negotiated settlement preventing damage to their property. They now abut six small lots instead of one 15-acre lot. Isn’t that strange?”

Jarrett said the affair cost the Trust, too.

“It was a solution that benefited all of us as much as it could. But in the process, the Town’s actions did cost the Trust tens and tens of thousands of dollars. I mean it’s many, many years of taxes. At the time we were paying about $3000 a year in taxes. So, you know, this is just years’, and years’, and years’ worth of taxes that the town cost us for no real good reason. Because the Town cost us so much money, we asked the Town if they would honor our tax exemption as a charitable organization.”

In a letter to the Town of Limington from FSHT dated July 13, 2009, the president of the Trust petitioned tax-exempt status based on the fact that the trust, “offered many free seminars…has given lessons in map reading, compass usage, and local history in schools…has lands open to the public for hiking and hunting and bird walks…and mails newsletters to all of the households in Limington.” Additionally, the letter cited that the Trust had monitored and collected ticks for a Lyme disease study on Trust land.

FSHT petitioned Limington selectman for property tax exemption on 11 lots that it owns in the Town of Limington for the years of 2009 and 2010. The selectman denied FSHT’s request. Trust contended that if their parcels were not exempt, then the Town overvalued the eight Open Space lots by misapplying the so-called alternative valuation method assessors may utilize to permit a reduction in valuation on easement-protected properties. The selectmen stood by their calculations.

So FSHT took its case to Augusta and petitioned the State’s Board of Property Tax Review (BPTR) in a hearing that took place in September 2011. Both Jarrett and Huntress testified. In a decision dated August 22, 2012, the 4-member Board unanimously found that “the Trust does not qualify for exempt status because its activities are not restricted solely to benevolent and charitable purposes.”

The BPTR cited that FSHT’s Articles of Incorporation provided that FSHT may engage in logging, farming and other compatible commercial, profit-making activities. The decision reports, “Moreover, Mr. Jarrett testified that a farm owned by the Trust in Parsonsfield engages in commercial farming activity. For this reason alone the property does not qualify as exempt from taxation under the provisions of section 652(1)(C).”

The BPTR decision states that, “statutes that establish exemptions from taxation should be strictly construed because they conflict with the universal obligation of all to contribute to just proportion toward the public burdens, and that all doubts and uncertainties as to the meaning of a statute are to be weighed against exemption.” The Board’s decision cited numerous examples of case law which supported those statements.

Not satisfied with the decision of the Board of Property Tax Review, the Trust has appealed the decision to York County Superior Court. Jarrett said land trusts statewide will be watching this case progress through the court system and he indicated that Maine Coast Heritage Trust (MCHT), an organization that assists land trusts across Maine achieve their goals, takes a very serious interest in the case.

Tim Glidden, Executive Director of MCHT said in a recent email, “I do know from our work with Maine land trusts that there are a wide range of practices including town-granted property tax exemption, use of the current use taxation programs available to any private land owner, payments in lieu of taxes on exempt properties, and payment of full ad-valorem taxes. It varies by town, by land trust and by the facts of each piece of land. Maine Coast Heritage Trust has filed a ‘friend of the court’ brief supporting FSHT’s claim of property tax exemption that is currently on appeal before Superior Court.”

Jarrett said the legal costs to date have impaired FSHT.

“It was our stewardship funds that we had to use to protect the property—with the legal fees,” Jarrett said. “That is why we asked the Town for tax exemption—so we could rebuild our stewardship funds.”

“Why should the taxpayers of Limington subsidize your legal expenses?” Huntress asked the land trust at the time, a question he said is echoed by many local residents even today. “The fact that they wanted the town to abate taxes so they could turn around and use that money for lawyers to come back and go to the state board or go wherever they wanted with litigation. I think you’ll discover for most other trusts, their major interest in avoiding paying taxes is to develop a war chest.”

Diana George Chapin is a freelance writer and a fourth-generation family farmer from Montville, Maine.